How to Start an LLC: How Much Does It Cost?

Starting your own business can be exhilarating, challenging, rewarding, and life-changing — sometimes all at once. But before you can open your doors; sign your first contract; or trim your first lawn, poodle, or head of hair, you need to set up your business as a business.

Choosing an LLC (limited liability company) for your business can be a great way to protect your personal assets while maintaining control and flexibility in how you run your operation.

While learning how to start an LLC typically is not as complicated as forming an incorporated business, many new business owners have questions about it. Near the top of the list is “How much does it cost?”

How Much Does it Cost to Set Up an LLC?

The total cost varies depending on the state where you’re doing business. Another variable is how much of the set-up and legwork you do yourself, or if you’d rather pay someone to handle it for you.

Let’s start with a look at the standard costs you can usually expect to set up an LLC.

1. Filing articles of organization.

The first step in getting your LLC is to file articles of organization in the state where you’ll be operating. That’s usually through the secretary of state’s office. Fees differ among states, but you can typically expect to pay between $50 and $500.

If you’re doing business in more than one state, you’ll likely need to file articles of organization with those as well. Most states charge the same for an out-of-state registration as they do for an in-state registration, but it’s best to confirm with your specific state.

2. Name reservation fee.

Your LLC’s name needs to be different from other businesses in your state. A quick check of your state’s business name database is an easy and free way to see if anyone else might already be using the name you want.

Once you establish your LLC, your name is registered, but if you have a name you love and don’t want to risk losing it to another business, you can reserve it in most states for between $10 and $50. Reserving a name is optional in all states except Alabama.

3. Publication fee.

Arizona, Nebraska, and New York require LLCs to publish a statement of formation in a local newspaper. The cost can usually range between $40 and $2,000, depending on the state.

4. Registered agent fee.

To form your LLC in most states, you’ll need to have a registered agent. That’s simply someone who can accept legal documents for the company. The registered agent must live in the state where the LLC is registered. It can be you or one of the other LLC members.

You also can typically hire a registered agent for between $100 and $300 annually. This is a good idea if you want more privacy or convenience, or you are not typically at an office during regular business hours.

5. Business licenses.

There’s a good chance your state will require your business to get a license or permit for your LLC. The specific requirements and fees differ among states. To help, we’ve put together license information for each state here.

Additionally, business licenses typically need to be renewed after a certain period of time. Fees for license renewal can usually range from $20 to $100.

6. Business insurance.

One of the biggest benefits of an LLC is personal asset protection. If that matters to you, then business insurance is another important consideration. It can protect you financially if you face an accident, property damage, injury, and more.

Without business insurance, you may be on the hook to cover the costs of a claim on your own — and that could be enough to close your business down.

Here at Simply Business, we make it fast and easy to protect all that hard work by helping business owners like you to find the insurance coverage they need. Plus, it’s affordable to get the protection your business deserves.

7. Expedited processing.

Until you get everything properly filed and processed, you can’t open a bank account or sign any contracts. If you need to get started faster, many states will speed things up for an additional fee.

8. Maintenance fees.

Once your LLC is established, some states require additional fees as well. One is a franchise tax, which is usually a flat fee, but it can vary, based on your LLC’s revenue. Your secretary of state’s office can provide additional information.

9. Regular report filing.

Most states require an LLC to submit a report that includes the LLC name, address, and your LLC number, as well as your registered agent information. The report is required to keep your LLC in good standing with the state and ensure it isn’t dissolved.

Filing periods typically range from once a year to once every 10 years - though this could change so it’s important to keep up to date in the state your business is a registered LLC in. Fees also vary from $9 (NY) to $820 (CA).

Setting Up Your LLC

Now that you have a good idea of the costs of getting your LLC started, the next question is what’s the best way to get your LLC off the ground.

There are three primary ways you can consider using to form your LLC:

• You can hire an attorney
• You can use an online service
• You can do it yourself

How to Start an LLC with an attorney.

If you’re not comfortable with creating and filing the paperwork, or if you simply can’t afford the time to do it yourself, hiring a business attorney could be a good solution.

Attorneys generally charge by the hour ($100-$300), so your total cost will depend on a variety of factors including, for example, how much they do for you, what it entails, and how complex it is. The cost can typically be between $1,000 and $3,000, but could be much higher depending on your specific business. If the LLC has multiple members or complicated arrangements, the cost will likely be higher.

Along with price, you should clearly understand what your attorney is providing. In some instances, they may just be writing the documents for you. In others, the service may include filing the documents with the state and/or local agencies. For an additional annual fee, you also can potentially have your attorney act as your registered agent.

It’s a good idea to work with an attorney who will walk you through the procedures and explain the documents being created and filed. Look for someone who has experience setting up LLCs and, if possible, experience with your specific type of business.

How to find a business attorney.

If hiring an attorney is the way you decide to go, here are a few simple ways to find one:

Ask for a referral — Few things carry more weight than a good recommendation. Your friends, family, and fellow business owners can be a trusted source for finding a good business attorney.

Check out your state bar association — Most have online directories where you can search for an attorney based on specialty or area of practice. Be sure to look for an attorney with a focus on small businesses and with your particular field or profession.

Mingle and network — Local business organizations often sponsor meetings and networking events with presentations from local attorneys. Along with picking up some good information, it's also a great way to meet attorneys, ask questions, and see who would be a good fit for you and your business.

Setting up an LLC with an online service.

If you don’t need legal expertise but you’d still like some guidance in putting your LLC together, there are many online services that can help.

Usually all you need to get started with an online LLC service is the name and address of your business, and the field or industry in which you operate. You’ll also need to provide information about yourself and your registered agent.

From there, an online service can usually create and file the required paperwork, or at least get it started. Many offer different service packages at various prices. You can have the online service take care of just about everything, or you can pay for help where you need it and handle some of the work on your own.

Many LLC services also may offer features such as online dashboards and notifications to keep you on top of deadlines for report filings, license expirations, and other important information and notices.

Most have phone and email customer support to answer questions and help navigate state and local agencies.

While an online LLC service can take some of the hassle and complexity out of forming an LLC, it can be a bit complicated choosing the one that’s right for you. Prices and services can vary greatly among providers. Some also try to upsell you on services such as registered agent services.

As with any important purchase decision, it pays to spend time checking out different websites and customer reviews.

Keep in mind that in most cases, the fees they charge may not include the various filing and licensing fees mentioned above. As with selecting an attorney, it’s helpful to spend the extra time understanding exactly what’s provided with their services.

If an online service feels like a good option for you, you can start your research with some of the services that many of our customers have used, such as Rocket Lawyer, IncFile, Zen Business, and LegalZoom.

How to Start an LLC on your own.

If the requirements at the beginning of this article don’t scare you, and you’d like to start your business with a little more cash, you could consider setting up your LLC on your own. Here’s more details on what you’ll need to do.

Articles of Organization — Good news here. These are generally short and easy to create depending on your specific business. Consider checking your secretary of state’s website for sample articles of organization for reference.

You’ll need to include your registered agent information and a statement of the LLC’s purpose. You also need to indicate if the LLC has one or more managers. When completed, the articles of organization need to be filed (along with the fee) with the secretary of state.

LLC Operating Agreement — This document specifies the company’s members and managers, along with their rights and responsibilities. Think of it as your LLC Guide. If you’ve put together a business plan, you’ll be off to a good start, as some of the information you need will be included there. You also can find templates and guides online.

Like the articles of organization, this document is filed with the secretary of state.

Employer Identification Number (EIN) — Also referred to as a “Federal Tax Identification Number,” you need this to open a business account at most banks, and if you have any employees.

You can get an EIN free and on the spot at the IRS website.

Licenses — Depending on what you do and where you do it, you may need licenses, permits, or other approvals and certifications. Check with your local and state governments to learn the requirements for your type of business, how to apply, the fees, and typical renewal requirements.

Business bank account — Your LLC needs a dedicated checking account. The bank will want to see your filed articles of organization and your EIN. You’ll also need to designate who has signing authority and any special signing requirements for checks over a certain amount.

LLC membership ledger — This is a written record of all the LLC members, the type and number of shares they have in the company, and other details related to the members’ ownership. Along with creating it, you’ll also need to keep it up to date.

Reports — As we mentioned, an LLC must provide information to the governing state on a regular basis. The documents and corresponding fees need to be filed properly and on time to avoid penalties or even dissolution of your LLC.

If you’re doing business in other states, make sure you know what their filing requirements and deadlines are.

Protecting Your LLC

Along with making a living with your new business, one of your other big concerns is likely protecting what you’re building. We get that. After all, we’re business insurance people.

Whether you form your LLC with an attorney, an online service, or on your own, business insurance is something to consider as you’re starting your LLC, and we’re ready to help.